Credit card competition heats up for frequent world travelers

By Joe Taylor Jr., CardRatings contributor

Updated, April 29, 2013

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In 2010, credit card companies battled for affluent customers with enhanced reward programs. In 2011, the battle for the most profitable credit card accounts will take place on the concourses of the world's airports. As banks rethink their approach to merchant service charges, the pressure's on to find customers who will make up in repeat spending what issuers might lose in percentage-based interchange fees. A series of announcements last fall signals that lenders are prepared to pull out all the stops to land big-ticket accounts from business customers and global travelers.

Foreign transaction fees waived

Credit card issuers routinely collect 3 to 5 percent of transaction amounts when converting to or from a foreign currency, or when handing a sale from an overseas merchant. To avoid fees, frequent travelers often load cash onto prepaid debit cards issued by Travelex and other global payment specialists. However, American Express recently announced that it plans to eliminate all foreign currency conversion fees from its Platinum and Centurion cards.

Although AmEx joins Capital One, Discover and PenFed in the no-foreign-fee business, waiving those fees on its two most lucrative cards signals its commitment to remaining the charge card of choice for frequent travelers. In a related move, MasterCard announced that it would purchase the retail debit card management operations of Travelex, giving the platform provider more direct access to savvy travelers.

Free luggage checking and airport amenities

Few issues have polarized American consumers like baggage handling fees of up to $50 per bag. Therefore, it's a no-brainer that affinity airline credit cards from Chase and American Express would offer cardholders the special perk of checking a bag for free. However, American Express has shaken up the industry again by alerting Centurion cardmembers that they'll enjoy rebates of up to $200 per year on checked bag fees and other in-flight expenses.

AmEx's biggest spenders will also enjoy many of the amenities usually reserved for participants in airline credit card reward programs, like free airport lounge access and travel tracking services. Competing banks aren't taking the news lying down, though promises of bonus miles and special reward experiences might not carry the same allure as free luggage handling and free currency conversion. Centurion Card holders, already accustomed to some of the industry's most lavish perks, might even earn back their annual fees if they spend enough money abroad.

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